The Eleventh Circuit recently reversed in part and affirmed in part the dismissal of a complaint alleging violations of the Georgia Uniform Deceptive Trade Practices Act, O.C.G.A. § 10-1-372, and the federal Lanham Act, 15 U.S.C. § 1125(a). Hi-Tech Pharm., Inc. v. HBS Int’l, 2018 WL 6314282 (11th Cir. Dec. 4, 2018). The case presented important questions about the relationship between the labeling requirements of the Food, Drug, and Cosmetic Act (“the FDCA”), 21 U.S.C. § 301 et seq., and state and federal laws prohibiting deceptive advertising. The Eleventh Circuit affirmed the lower court’s determination that the plaintiff’s state-law claim was preempted by the FDCA, but reversed the lower court’s ruling that the plaintiff failed to state a claim under the Lanham Act, finding that the plaintiff’s label was plausibly misleading.
Plaintiff Hi-Tech Pharmaceuticals, Inc., a dietary-supplement producer, sued Defendant HBS International Corp., a distributor of sports-nutrition supplements, alleging that the label of HexaPro, a product supplied by one of HBS’s wholly-owned subsidiaries and distributed by HBS, violated Georgia’s Uniform Deceptive Trade Practices Act and the Lanham Act. Hi-Tech’s complaint alleged that the label misled consumers in terms of the quantity and source of protein in a serving of HexaPro because the label boasted that the product was an “Ultra-Premium 6-Protein Blend” with “25 G[rams of] Protein Per Serving,” but the 25 grams of protein was not completely derived from the 6-Protein Blend. In addition to the six whole proteins, HexaPro contained “spiking agents”—free-form amino acids and other non-protein ingredients—which HexaPro included in its measurement of 25 grams of protein per serving.
HBS filed a motion to dismiss the complaint, which the district court granted, finding that Hi-Tech’s state-law claim was preempted by the FDCA and that the complaint failed to state a claim under the Lanham Act because it failed to sufficiently allege that the label was misleading. Hi-Tech appealed.
Writing for the court on appeal, Judge William Pryor first rejected HBS’s argument that Hi-Tech forfeited three dispositive arguments by failing to respond to them at the motion to dismiss stage. Relying on Eleventh Circuit precedent, the court held that Hi-Tech could not waive its arguments on appeal by failing to make them in response to HBS’s motion to dismiss. The court noted that the district court had considered two of the three arguments for dismissal presented by HBS and, based on those arguments, the court dismissed Hi-Tech’s complaint. Consequently, Hi-Tech was entitled to challenge HBS’s arguments on appeal, whether or not it had done so in the district court.
The court next considered whether Hi-Tech’s claim under the Georgia Uniform Deceptive Trade Practices Act was preempted by the FDCA. It affirmed the district court’s determination that the FDCA’s express preemption provision barred Hi-Tech’s state-law claim. The court reasoned that the FDCA expressly preempts state laws that “directly or indirectly establish . . . any requirement for nutrition labeling of food that is not identical” to the FDCA’s requirement that the total protein contained in each serving size or other unit of measure be disclosed, 21 U.S.C. § 343(q), as well as the FDCA’s requirement respecting any claim concerning statements about nutrient content that expressly or by implication characterize the level of any nutrient, id. § 343(r)(1)(A). The court concluded that Hi-Tech’s Georgia Uniform Deceptive Trade Practices Act claim was preempted because it would impose liability for HexaPro’s label even though the label did not violate the FDCA or its related regulations. Rather, HexaPro’s label and the statement that it contained 25 grams of protein per serving complied with a federal regulation that permits protein content to be calculated on the basis of the factor 6.25 times the nitrogen content of the food. The court pointed out that forcing HBS to revise the HexaPro label to remove or alter any statements that Hi-Tech argued were misleading would force HBS to comply with labeling requirements other than those set forth by federal law. Additionally, the court emphasized that to avoid preemption, Hi-Tech’s state-law claim was required to be identical, not merely consistent, with the federal requirements.
The final issue the court took up was whether Hi-Tech’s Lanham Act claim was properly dismissed. Looking to the allegations of the complaint, the court reversed the district court’s ruling, holding that the allegations in the complaint supported the plausible inference that HexaPro’s label is misleading. The court noted that the front of the HexaPro label identified the product as an “Ultra-Premium 6-Protein Blend” that contains “25 G[rams of] Protein Per Serving”; the left side of the label stated that HexaPro “is an Ultra-Premium, Ultra-Satisfying Blend of 6 High-Quality Proteins”; and the right side of the label, listing nutritional facts and all of the ingredients, stated that each serving of HexaPro contained 25 grams of protein. The court concluded that, taken together, a reasonable consumer might be misled to believe that a serving of HexaPro contains 25 grams of protein derived from the 6 Protein-Blend, even though that was not the case. In reality, HexaPro contained 17.914 grams of the 6-Protein Blend per serving, and HexaPro’s use of the spiking agents raised the protein count to 25 grams per serving.
The court went on to explain that Hi-Tech’s theory that the label would mislead a reasonable consumer to believe that the only protein in HexaPro was derived from the 6-Protein Blend was plausible since there was nothing on the HexaPro label to indicate that the 25 grams of protein per serving came from any source other than the whole-protein sources comprising the 6-Protein Blend; the term “protein” was only used in the context of the ingredients that made up the 6-Protein Blend; and the label treated amino acids as distinct from protein despite the fact that they were taken into account in reaching the 25 grams of protein per serving measurement. Although the HexaPro label complied with the Food and Drug Administration’s guidelines for calculating protein measurements, the court noted that the FDCA does not generally bar false advertising claims under the Lanham Act.
Lastly, the court rejected two additional arguments raised by HBS in concluding that dismissal of Hi-Tech’s Lanham Act claim was improper. First, the court disagreed with HBS’s argument that it could not simultaneously comply with FDA regulations and the Lanham Act—HBS could state that HexaPro contained 25 grams of protein per serving, in compliance with FDA regulations, and indicate how much of the 25 grams of protein was derived from each protein source, to ensure that the label was not misleading under the Lanham Act. Second, the court found HBS’s assertion that the Lanham Act claim was barred because it required the court to interpret FDA regulations, and thus encroached on the exclusive enforcement authority of the FDA, to be without merit. In determining whether the label of HexaPro was deceptive, the court did not have to interpret or apply the FDCA. Accordingly, Hi-Tech’s Lanham Act claim did not step on the FDCA’s toes.
Posted by Kamryn Deegan.